Canada finance minister says growth a concern, mum on deficit cap

MONTREAL (Reuters) - Canadian Finance Minister Bill Morneau said on Tuesday the public is concerned about the economy, but declined to indicate whether the Liberal government will stick to their budget deficit pledge or boost spending.

Minister of Finance Bill Morneau, with Provincial Finance Ministers, takes part in a news conference in Ottawa December 21, 2015. REUTERS/Blair Gable

The minister, speaking to reporters during a week-long consultation on his upcoming budget, acknowledged that Canadians were concerned about the slide in the country’s currency, which like oil hit a 12-year low on Tuesday.

The currency has been dropping in parallel with the price of oil, a major Canadian export, and a Bank of Canada survey released on Monday said the effects of lower commodity prices had begun spreading beyond the resource sector.

“We respect the fact that Canadians have a concern around the economy, we are paying attention. We will be working in our budget to make sure that our initiatives help to grow the economy,” he said.

“We think the initiatives we already outlined are the appropriate initiatives to make a difference,” he added, when asked if the new government would boost infrastructure spending even beyond the increases promised in last year’s campaign.

The Liberal platform promised three deficits of up to C$10 billion ($7 billion) a year for three years and said they would only exceed that if there were a major new shock to the economy.

Asked on Tuesday if he would go over that deficit cap, he declined to answer, referring instead again to Canadians’ looking closely at the price of oil and the Canadian dollar.

“I have not yet written the budget,” he said.

He said that in hindsight it looked like a prudent decision in December’s fiscal update to have made an adjustment to private-sector forecasts to allow for disappointing oil prices or global growth.

Asked whether he would have to imitate former Prime Minister Jean Chretien and former Finance Minister Paul Martin, who talked up the Canadian dollar during its last major bout of weakness, Morneau noted the public was keeping a close eye.

“I know Canadians are concerned about the changes in the value of the Canadian dollar. It’s important for all Canadians,” he said.